Trian reveals small DuPont stake

5:14 PM MDT | August 14, 2013 | Robert Westervelt

Trian Fund Management, led by activist investor CEO Nelson Peltz, has acquired a 0.6% stake in DuPont, according to regulatory filings.

Trian held 5.8 million DuPont shares at the end of the second quarter, valued then at roughly $300 million, according to regulatory filings with SEC. It is not clear whether Trian has made more purchases since the end of the second quarter. DuPont shares spiked more than 5% on 17 July following reports on CNBC that Trian acquired a large stake in the company. A Trian spokesperson could not immediately be reached for comment on the investment.

“We are aware of Trian’s investment and, as always, we routinely engage with our shareholders and welcome constructive input,” a DuPont spokesperson says. “We will evaluate any ideas Trian may have in the context of our ongoing initiatives to build a higher value, higher growth company for our shareholders.”

Trian’s investment comes as DuPont prepares to sell or spin off its $7-billion/year performance chemicals unit, which includes titanium dioxide, fluorochemicals, and specialty and industrial chemicals. DuPont says the review, announced 23 July, is part of its transformation to a “higher growth, less cyclical company.”

DuPont earlier this week adopted a cash payout severance plan for senior executives fired following a company takeover and also changed company bylaws regarding advance notice of shareholder meetings and nominations. Prior to the change, DuPont was one of the few major industrial companies and chemical makers that did not provide severance or change in control payments for top executives. Under the severance plan adopted 12 August, senior company officers would receive a lump sum cash payment equal to two times base salary and target bonus if terminated within two years of a takeover. The CEO would receive a buyout package equal to three times compensation.

Trian says its “[investment] strategy involves investing in public companies with attractive business models that Trian believes trade significantly below intrinsic value due to operating underperformance.” The firm has published white papers on some investments, offering guidance on how management can “enhance shareholder value through a combination of strategic redirection, improved operational execution, more efficient capital allocation and sharpened focus.” Ingersoll-Rand agreed in late 2012 to spin off certain businesses under pressure from Trian, and the company last month called on Pepsico to separate its beverages and snacks business.

Peltz and Trian have some chemical industry history. In 1986, Avery Inc., controlled by an investment group led by Peltz, purchased the chemical operations of Uniroyal in a leveraged buyout. Peltz subsequently became CEO of Avery. Uniroyal Chemical was sold by Avery as part of a management-led buyout in 1989. Uniroyal was subsequently acquired by Crompton & Knowles in 1996, a predecessor to Chemtura. Trian would later acquire a large stake in Chemtura in 2007.